The Rise of the Service Economy

By Francisco J. Buera, Joseph P. Kaboski. 2012

533 citations recorded by the source corpus.

This paper analyzes the role of specialized high-skilled labor in the growth of the service sector as a share of the total economy. Empirically, we emphasize that the growth has been driven by the consumption of services. Rather than being driven by low-skill jobs, the importance of skill-intensive services has risen, and this has coincided with a period of rising relative wages and quantities of high-skilled labor. We develop a theory where demand shifts toward ever more skill-intensive output as income rises, and because skills are highly specialized this lowers the importance of home production relative to market services. The theory is also consistent with a rising level of skill and skill premium, a rising relative price of services that is linked to this skill premium, and rich product cycles between home and market, all of which are observed in the data.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/9824854b6d8a4006993ff2c2e550837c0feb73e0

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Citations in the corpus

Engel's Law in the Global Economy: Demand‐Induced Patterns of Structural Change, Innovation, and Trade (2019, unknown): “Engel’s Law plays the key role in most studies in this literature, see, e.g, Kongsamut, Rebelo, and Xie (2000) and Buera and Kaboski (2012), just to name a few.”
A Model of China's State Capitalism (2015, unknown): “…force for China s economic growth.11 Third, our paper provides the rst theoretical model with explicit international trade and 9Also see Acemoglu and Guerierri (2008), Buera and Kaboski (2012), etc. 10See Matsuyama (2009), Yi and Zhang (2010), McMillan and Rodrik (2011) for open-economy settings.”
Growth and Structural Transformation (2013, methodology): “11While we do not develop this issue further here, Buera and Kaboski (2012b) also show that at low levels of GDP per capita the manufacturing sector expands more quickly than does the service sector.”
Can Basic Entrepreneurship Transform the Economic Lives of the Poor? (2013, background): “…proceed together [Kuznets 1966; Chenery and Syrquin 1975, Murphy, Shleifer and Vishny 1989, Caselli and Coleman 2001, Ngai and Pissarides 2007, Buera and Kaboski 2012], far less is known about whether policy interventions that transfer capital and skills are capable of bringing about…”
The Rise of the Machines: Automation, Horizontal Innovation, and Income Inequality (2014, unknown): “This makes our paper closer in spirit for instance to the work of Buera and Kaboski (2012), who argue that the increase in income inequality is linked to the increase in the demand for high-skill intensive services, which results from non-homotheticities in consumption.”
The tradability of services: Geographic concentration and trade costs (2019, unknown): “5The service sector is attracting the attention of macroeconomists concerned with growth, for example, Buera and Kaboski (2012).”
The Size Distribution of Farms and International Productivity Differences (2014, unknown): “(b) Larger farms have much higher labor productivity (value added per worker) than smaller farms, implying that farm size differences can potentially have large effects on measured (1)See for instance Kuznets (1971), Gollin, Parente, and Rogerson (2002), Caselli (2005), Restuccia, Yang, and Zhu (200”